Episode 100

[whooshing]

They're placing their bet on the relationships that they have with existing employees, existing customers, rather than on their future employees and their future customers.

As we know, the demographics of the world are, are changing.

We're simply becoming much more diverse than we are homogeneous.

That calculation, to me, says these companies are making a decision to put themselves at a competitive disadvantage.

That's a great answer.

Which is a weird thing for any shareholder to want.

[whooshing] And of course, after Trump was sworn in, flanked by tech executives, the surface area only got bigger.

The new administration pressured companies, law firms, and universities with a flurry of executive orders and lawsuits, and honestly, they got very little pushback.

There were holdouts, most notably Costco, whose management opposed and shareholders overwhelmingly voted against the proposal to drop diversity programs.

But capitulation was a much more common response.

And while often positioned as pragmatism, our frame was companies either acting out of fear or holding the line and acting from strength.

Target became the poster child for going along to get along with the new Trump administration, clearly hoping to hold off legal challenges, not just from Washington, but red state attorneys general.

[whooshing] What if this wasn't a retreat, but a strategic repositioning that allows them to continue supporting DEI in ways that we can't immediately see? If Target becomes too politically vulnerable, they could lose, uh, the ability to do anything for these communities.

Because sometimes the way to win the bigger fight is not to charge straight at it, but to make sure that you're still in the room where, where the real power is being negotiated.

That may be, but I, I think it's one of those situations where you're making this gesture that says you're still important to us, and your audience reacts by saying that you've got a funny way of showing it.

[laughs]

You're betting that if you give on one thing, you won't have to give up on more.

But you're also showing that you're willing to make concessions, so what will you be asked to give up next? [whooshing] As the Trump administration extracted concessions from companies out of pragmatism or simple conflict aversion, we wondered if there was anything to this idea that anti-diversity activists had been threatening: go woke, go broke, either by regulatory punishment or consumer preference.

And as if to answer the question, last month came research from UC Berkeley and Stanford.

Turns out firms who refused to reverse course on diversity did just as well as companies who rolled it back.

Costco, Apple, and Delta Airlines, no financial impact for holding on to their DEI promises.

Craig, you were talking with a lot of CCOs as they were making these calls back in 2024, 2025, and I, I suspect they knew they were making short-term decisions at some level, but shouldn't there have been more consideration for the long-term implications?

I think they knew they were making short-term decisions, but I'm not really sure they fully calculated what those decisions would do to their future freedom of action.

The immediate question was, how do we keep ourselves off the administration's target list?